24 August 2023

Xtract Resources Plc

("Xtract" or the "Company")

Zambian Exploration Licences joint venture

The Board of Xtract Resources Plc ("Xtract" or the "Company") is pleased to announce that the Company has entered into a joint venture agreement with Cooperlemon Consultancy Limited in relation to the exploration for copper at large scale exploration licenses 29123-HQ-LEL and 30459-HQ-LEL in Northwest Zambia (the "Licences").

Highlights

·    The two exploration licences are located within the Western Foreland geological district that hosts the Kamoa - Kakula deposit and the Central Fold and Thrust Belt ("Fold Belt") in Northwest Zambia.

·    The two licences cover a combined 107,000 hectares area covering ground in a highly prospective part of Northwest Zambia where competition for exploration licences is acute.

·    Licence 29123 - HQ - LEL is located to the west of the perceived boundary between the Western Foreland and Fold Belt and Licence 30459 - HQ - LEL is located coincident with the boundary and may also include part of the Fold Belt.

·    Company believes there is scope for the discovery of potentially high-grade Kamoa-style mineralisation at depth and lower grade bulk tonnage at or near-surface.

·    There has been limited exploration to date and initial fieldwork will commence in September on the two licences with a view to defining potential drill targets as soon as possible.

Colin Bird Executive Chairman said:

" The two licences are well situated within the Western Foreland  geological district that hosts potential Kamoa style mineralisation as confirmed by recent exploration and drilling on nearby licences. It is our intent to commence field work with the objective of identifying potential drill targets for Kamoa style mineralisation and also for Kolwezi style mineralisation which has the potential for near surface copper and possibly cobalt mineralisation. We are very excited about the prospects for the joint venture and look forward to updating the market on exploration activities."

Joint Venture Agreement

Xtract yesterday entered into a joint venture agreement with Cooperlemon Consultancy Limited ("Cooperlemon") in relation to the exploration for copper at large scale exploration licenses 29123-HQ-LEL and 30459-HQ-LEL in Northwest Zambia (the "Licences"). Under the joint venture agreement ("JV Agreement"), Xtract has agreed the following key terms:

Earn-in and Phase 1 exploration budget: Xtract will earn a 65% interest in the joint venture by funding exploration expenditure over an initial two-year period ("Phase 1") on the Licences of not less than US$2 million. Exploration is expected to commence in September 2023, and will comprise both physical activity within the Licence boundaries (including but not limited to mapping, soil geochemistry, geophysics and drilling), and desktop studies, laboratory analysis and interpretation of data and results. Xtract anticipates funding this exploration expenditure from existing resources and current ongoing operational activities.

If the Phase 1 exploration results are successful and prove the continuity of mineralisation at grades suggesting the potential for the future development of a Mineral Resource of not less than 500,000 tonnes of contained copper, consistent with economic recovery at the depth of discovery with a minimum internal rate of return of not less than 25% and a payback period not exceeding 42 months (including the recovery of capital expenditure), then there will be a second two year exploration period ("Phase 2").

Phase 2 exploration budget: The Phase 2 exploration expenditure of US$3 million will also be funded by Xtract who will be the operator of the Licences for the duration of the Agreement.

Consequence of Trade Sale: If there is a trade or any other sale of the Licences and / or the Joint Venture during Phase 1 of the joint venture then Xtract will be deemed to have a 55% interest in the Joint Venture.  A sale requires the agreement of both Xtract and Cooperlemon.

Mine Development: In the event that either or both of the licences advance to a point where they are commercially viable and suitable for development then the licences will be moved to a corporate entity to be owned 75% by Xtract and 25% by Cooperlemon, and it will be the responsibility of the newly formed corporate entity to raise all capital for mine development and future operations.

Further information on the Licences

Licence No: 29123-HQ-LEL, which comprises 88,149 hectares and expires on 7 September 2025, is held by Oval Mining Limited ("Oval"). The application for Licence 30459-HQ-LEL, which comprises 19,600 hectares and which has been approved for issue by the Zambian Mining Cadastre, is held by Far North Enterprises Limited ("Far North"). Both licences are located in North-West Zambia adjacent to the Democratic Republic of Congo (DRC) border. Oval and Far North have each agreed with Xtract to be bound by the terms and the conditions of the JV Agreement with Cooperlemon (who is acting on their behalf) as though they were a party to the JV Agreement.

Geology, location and prospectivity

The style of mineralisation and associated geology and structure responsible for the Kamoa-Kakula deposit operated by Ivanhoe Mines in the neighbouring Democratic Republic of the Congo ("DRC"), is believed to extend across the border into North-West Zambia where the Licences are located. Ivanhoe Mines Kakula Mine is reported to be the world's highest -grade copper mine with reported deep high-grade (>5% Cu) copper mineralisation.

The geology of the Licence areas is dominated by the Western Foreland succession (Kamoa-style mineralisation) and the neighbouring Lufilian Fold Thrust Belt that plays host to lower grade bulk tonnage near-surface mineralisation. The Licence areas transgress the projected Western Foreland - Thrust Belt boundary and, although historically underexplored, are therefore considered by the Board to be strongly prospective.

Kamoa-style mineralisation requires the architectural domain known as the Western Foreland, along with the presence of diagnostic lithology that includes a reduced diamictite horizon marking the boundary of reduced - oxidised strata and structures resulting from growth faults including grabens and stratigraphic thickening. 

African Pioneer Plc, which has an interest in four licences in North West Zambia three of which are adjacent to the Licences, recently reported that its partner's (First Quantum Minerals) exploration had confirmed the presence of mineralisation with diagnostic regional geological and architectural similarities apparently consistent with Kamoa-Kakula deposit mineralisation located in the DRC and with apparent similarities to that needed to facilitate the large scale deposition of high-grade copper mineralisation of the Kamoa Kakula type.

Further information is available from the Company's website which details the company's project portfolio as well as a copy of this announcement: www.xtractresources.com

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").

The person who arranged for the release of this announcement on behalf of the Company was Colin Bird, Executive Chairman and Director.

Qualified Person:

Colin Bird: The technical information contained in this announcement has been reviewed, verified, and approved by Colin Bird, C.Eng, FIMMM, South African and UK Certified Mine Manager and Director of Xtract Resources plc, with more than 40 years' experience mainly in hard rock mining.

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